More bandwidth caps seen coming to wireless data services

08 октября 2008

Operators faced with the dilemma of trying to protect their networks without aggravating customers.

Recent moves to limit wireless data usage set off a furor among the gadget savvy and in the technology blogosphere. While there are relatively few restrictions in the wireless industry now, more are likely to show up. Such limits are already in place at European carriers, which portend similar action in the U.S. Driving the need are more bandwidth-intensive wireless services such as video and more sophisticated mobile Web programs.

"It's one of the mechanisms service providers use to keep an eye on heavy user," said Emma Mohr-McClune, an analyst at research firm Current Analysis."In the future, I absolutely think it will become a bigger issue.

"The dilemma centers on the carriers' ability to balance the needs of average subscribers with a few heavy users. It's a debate that's raging on the wired side with the traditional telco and cable companies. By protecting the network, the companies face a potential backlash from consumers, who often feel misled by the promise of "unlimited."

Last week, T-Mobile USA sparked a vocal criticism over the 1-gigabyte cap on the unlimited data plan offered for the upcoming Google Inc. phone. On Tuesday, Sprint Nextel Corp. drew criticism when its WiMax network, Xohm, included policy that could potentially allow Sprint to block traffic.

The response was swift. T-Mobile USA, a unit of Deutsche Telekom AG, removed the language a day after the phone was unveiled. Sprint publicly said it would not limit or police the network.

But the issue isn't likely to be resolved soon. T-Mobile USA said it still reserved the right to slow a person's connection if it was taxing the network.

The three largest carriers - AT&T Inc., Verizon Wireless, and Sprint Nextel Corp. - don't have restrictions on the unlimited data plans they offer to smartphones. That's partly because today's phones don't consume that much bandwidth. Spokesmen for the three carriers said there are no plans to place any restrictions on their plans.

The carriers do have a 5-gigabyte cap on wireless data cards that plug into laptops, although the rule isn't strictly enforced.

Scarce Resource

The debate is already raging on the wired side. Last month, Comcast Corp. submitted a plan for managing its network to the Federal Communications Commission, after having been reprimanded for slowing traffic for certain applications such as file-sharing services. It began to cap data usage on Wednesday.

AT&T, meanwhile, said it is exploring the notion of pricing tiers, caps and other options to discourage heavy Internet usage.

But capacity on the wireless side is a more pressing issue because of the limited spectrum available to carry the signals.

"Wireless is a scarce resource," said Maribel Lopez, an analyst at Lopez Research Inc."They're basically using a lot of bandwidth and there's just not enough of it."

For now, phones don't take up a large amount of bandwidth since e-mails, text messages and phone calls dominate the lines. But video is a potential problem, particularly as people begin downloading and sending their own.

The act of tethering, or using the cellphone's unlimited data connection to power a Wi-Fi hotspot, is another bandwidth-hogging act. A program for the iPhone, called NetShare, allowed the Apple Inc. device to act as an unlimited Internet source for a laptop. Apple took down the program, and carriers have been proactive in stopping it.

"The carriers are slapping you pretty quickly on the fingers," said Roger Entner, head of the communications practice at IAG Research."You're paying $5 to $10 for service you should be paying $60 for."

Another potential abuse that has grown in popularity in Europe is the use of the phone's data service to make Internet phone calls, which gets around using the limited minutes on a voice plan. It's less of a problem in the U.S., Entner said. The Meaning Of Unlimited

Much of the opposition to restrictions come as a result of the constant touting of unlimited plans, flat-rate pricing and all-you-eat-buffet of services.

The wireless carriers in the past attempted to offer tiered data plans with limits, but they were unpopular because users couldn't keep track of their Internet usage and were hesitant to pay for the service. The carriers needed to switch to an unlimited offering to attract users.

"It was a great idea to stimulate demand," Lopez said."Now they're dealing with the practicality of what's happening."

As a result, Americans are used to unlimited, and have been vocal about any hint of restrictions.

Public interest group Free Press first commented on the terms and conditions on Sprint's Xohm network.

"We are very troubled by this development and the larger moves across the wireless industry to limit consumer access to the legal content and services of their choice," Ben Scott, policy director of Free Press, said in a statement.

For now, the problem affects relatively few users. Much of the issue surrounds the perception of the service. Otherwise, "we would have seen so much more outrage," Entner said.

But as data usage grows in smartphones and laptop cards, and carriers begin to seriously eye caps, more users could start hitting that ceiling. It's already happening in Europe.

"Mobile data is taking off," Mohr-McClune said."Operators are reporting huge peaks and ceilings being surpassed we've never seen before."